ILLINOIS POLLUTION CONTROL BOARD
February 16, 2006
DYNEGY MIDWEST GENERATION, INC.
(HENNEPIN POWER STATION),
Petitioner,
v.
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
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PCB 06-72
(CAAPP Permit Appeal - Air)
ORDER OF THE BOARD (by N.J. Melas):
This is one of 21 appeals filed by electrical power generating facilities challenging
various conditions of permits issued by the Illinois Environmental Protection Agency (Agency)
on September 29, 2005. These permits were issued by the Agency under the provisions of the
Clean Air Act Permit Program (CAAPP) under Section 39.5 of the Environmental Protection Act
(Act) (415 ILCS 5/39.5 (2004)). The CAAPP permits replace expiring State operating permits
for the same activities. Today’s order addresses the petitioner’s motion to stay the entire
September 29, 2005 CAAPP permit, as well as the Agency’s motion for leave to file the
administrative record by compact disk.
These permit appeals raise similar issues regarding the inter-relationship of various
provisions of the Act and the Illinois Administrative Procedure Act (APA) (5 ILCS 100/10-65(b)
(2004)). The essential question is whether the CAAPP permit is subject to the “automatic stay”
provisions of the APA, and, if not, whether the facts in the case justify the Board’s exercise of its
discretion to issue a stay of some or all of the CAAPP permit’s conditions. The petitioners in
these appeals have argued that the APA stays the new CAAPP permit in its entirety, allowing
that entity to operate under its old State operating permit. Alternatively, petitioners argue that
the Board should stay either only the contested conditions of the CAAPP permit, or the permit in
its entirety. The Agency argues that the APA does not apply, and urges in various cases either
that the Board should grant no discretionary stay, or that any stay should be limited to the
contested conditions of the CAAPP permit.
Each of the cases also raises issues about how the Agency can best file the voluminous
records in these appeals, considering both the benefits and detriments of paper (hard copy) and
electronic filing. The Agency has requested leave to file the administrative record on a set of
compact disks that, due to cost concerns, cannot be electronically searched.
In this particular appeal, the Agency issued the CAAPP permit to Dynegy Midwest
Generation for its coal-fired electric generating station, called the Hennepin Power Station,
located at R.R. #1, Box 200AA, Hennepin, Putman County. DMG appeals conditions that DMG
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asserts are contrary to applicable law and conditions that first appeared in the August 2005
proposed permit and upon which DMG did not have the opportunity to comment. DMG also
appeals the effective date of the permit.
For the reasons expressed below, the Board finds that the APA’s automatic stay provision
applies to this case, consistent with long-standing case law under the Act: Borg-Warner Corp. v.
Mauzy, 100 Ill. App. 3d 862, 427 N.E. 2d 415 (3rd Dist. 1981). Section 10-65(b) of the APA in
effect issues a stay by operation of law, so that it is unnecessary for the Board to reach the issue
of whether to exercise discretion to enter a stay in a particular case.
Regarding the administrative record, after consideration of the arguments concerning
costs and ease of access to information in the record, the Board finds that it is essential for the
Agency to file at least one original hard, paper copy of the record. The Agency may file the
additional required four copies of the record on compact disk; these need not be in a searchable
format. The Board directs the hearing officer to set the time for the filing of the record in
consultation with the parties.
PROCEDURAL BACKGROUND
On November 3, 2005, DMG filed the petition of appeal of its CAAPP permit issued on
September 29, 2005. As part of the initial filing, DMG asserted that it would operate as if the
entire CAAPP permit were stayed, and the existing permits for the facility continued in effect.
DMG argued that pursuant to Section 10-65(b) of the APA and the holding in Borg-Warner, the
CAAPP permit issued by the Agency does not become effective until after a final ruling on the
permit appeal by the Board, and if remanded, until the Agency has issued the permit consistent
with the Board’s order.
On November 17, 2005, the Board accepted the appeal for hearing, yet reserved ruling on
the stay issue. On November 18, 2005, the Agency opposed DMG’s request for a stay and
simultaneously moved for more time to file the record.
On December 2, 2005, DMG filed a reply in support of its request for a stay along with a
motion for leave to file
instanter
. On December 15, 2005, DMG responded to the Agency’s
motion for an extension of time to file the record. On December 19, 2005, the Agency
responded with a motion for leave to file a surreply. Finally, DMG responded in opposition to
the Agency’s motion to file a surreply on December 30, 2005.
On January 30, 2006, the Agency moved to file the administrative record on a set of
compact disks. DMG responded on February 3, 2006.
GENERAL STATUTORY FRAMEWORK
Chronology
The Act and General Procedural Rules: 1970-74
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The Act became effective in July 1970. Three months later the Board adopted its first set
of procedural rules, including rules for the conduct of contested cases and specific permit appeal
rules. Procedural Rules, R70-4 (Oct. 8, 1970). As of July 1, 1977, the version of the procedural
rules in effect was an updated version adopted in 1974. Revised Procedural Rules of the
Pollution Control Board, R73-4 (Oct. 10, 1974).
The APA: 1977
In 1977, the Illinois Administrative Procedures Act came into effect. The APA provides
in pertinent part:
Sec. 1-5. Applicability.
(a) This Act applies to every agency as defined in this Act. Beginning
January 1, 1978, in case of conflict between the provisions of this Act and
the Act creating or conferring power on an agency, this Act shall control.
If, however, an agency (or its predecessor in the case of an agency that has
been consolidated or reorganized) has existing procedures on July 1, 1977,
specifically for contested cases or licensing, those existing provisions
control, except that this exception respecting contested cases and licensing
does not apply if the Act creating or conferring power on the agency
adopts by express reference the provisions of this Act. Where the Act
creating or conferring power on an agency establishes administrative
procedures not covered by this Act, those procedures shall remain in
effect.
Sec. 1-35. “License” includes the whole or part of any agency permit, certificate,
approval, registration, charter, or similar form of permission required by law, but it does
not include a license required solely for revenue purposes.
Sec. 1-40. “Licensing” includes the agency process respecting the grant, denial,
renewal, revocation, suspension, annulment, withdrawal, or amendment of a license.
Sec. 10-65. Licenses.
(a) When any licensing is required by law to be preceded by notice and an
opportunity for a hearing, the provisions of this Act concerning contested
cases shall apply.
(b) When a licensee has made timely and sufficient application for the renewal
of a license or a new license with reference to any activity of a continuing
nature, the existing license shall continue in full force and effect until the
final agency decision on the application has been made unless a later date
is fixed by order of a reviewing court.
***
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(d) Except as provided in subsection (c), no agency shall revoke, suspend,
annul, withdraw, amend materially, or refuse to renew any valid license
without first giving written notice to the licensee of the facts or conduct
upon which the agency will rely to support its proposed action and an
opportunity for a hearing in accordance with the provisions of this Act
concerning contested cases. At the hearing, the licensee shall have the right
to show compliance with all lawful requirements for the retention,
continuation, or renewal of the license. If, however, the agency finds that
the public interest, safety, or welfare imperatively requires emergency
action, and if the agency incorporates a finding to that effect in its order,
summary suspension of a license may be ordered pending proceedings for
revocation or other action. Those proceedings shall be promptly instituted
and determined.
(e) Any application for renewal of a license that contains required and
relevant information, data, material, or circumstances that were not
contained in an application for the existing license shall be subject to the
provisions of subsection (a). 5 ILCS 100/1-5, 1-35, 1-40, 10-65 (2004).
The Borg-Warner Case: 1981
The inter-relationship of the Act and the stay provisions of the APA has been examined
and construed in only one case: Borg-Warner, 427 N.E.2d 415. The Borg-Warner Corporation
(Borg-Warner) had timely filed an application for renewal of its National Pollutant Discharge
Elimination System (NPDES) permit. The Agency issued the permit May 21, 1989, to become
effective June 21, 1980. Borg-Warner sought relief simultaneously before the Board and a
circuit court.
Borg-Warner’s appeal to the Board challenged several contested conditions. Borg-
Warner sought, and was granted by the Board, a stay of enforcement of contested conditions
pending resolution of the circuit court action.
In the circuit court, Borg-Warner sought injunctive and declaratory relief and
determination of the issue as to “whether Board-Warner was entitled to an adjudicatory hearing,
under the Illinois APA, prior to any EPA action on the permit application.” Borg-Warner, 427
N.E.2d at 417. The court granted the relief requested and ordered the Agency to grant Borg-
Warner an adjudicatory hearing on its application for renewal of its NPDES permit. The Agency
appealed, arguing that no hearing was necessary.
The court first looked to the applicability section of the APA. Noting that the Board’s
1974 NPDES procedural rules were not effective until NPDES authorization, the court found that
the NPDES rules became effective in October 1977. The court found that since there were no
Illinois procedures for handling NPDES permit decisions in effect as of July 1, 1977, the
provisions of the APA applied. Borg-Warner, 427 N.E.2d at 417-18.
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The court went on to find that the licensing section of the APA applied in the NPDES
permit context. The court found, in conclusion, that a pre-permit issuance hearing before the
Agency was discretionary under federal law and hence the APA; the only hearing required under
federal law is the hearing to contest permit denial or conditions. Borg-Warner, 427 N.E.2d at
419-20.
Among the issues Borg-Warner posed to the court was whether “due process requires a
say of the effectiveness of the renewal permit, until after its hearing before the PCB.” The court
went on to specifically find that it need not reach that issue:
Under applicable Illinois statutes, such a stay of the effectiveness of a renewal
permit is required. [quotation of the text of Section 16(b) (now Sec. 10-65(b))of
the APA omitted] In this case, Borg-Warner made application for renewal of its
NPDES permit, that application was timely and sufficient on the record before us,
and therefore its original permit continues in effect until final action on the
application by the administrative bodies charged with making the determination.
A final decision, in the sense of a final and binding decision coming out of the
administrative process before the administrative Agencies with decision making
power, will not be forthcoming in the instant case until the PCB rules on the
permit application, after Borg-Warner has been given its adjudicatory hearing
before the PCB. Thus, until that time, under Section 16(b), the effectiveness of
the renewed permit issued by the EPA is stayed. Borg-Warner, 427 N.E.2d at
421.
CAAPP Permit Program: 1990-1994
The CAAPP implements Title V of the federal Clean Air Act, 42 U.S.C. 7401
et seq
.
The federal Clean Air Act Amendments of 1990 lead the General Assembly to enact Section
39.5 of the Act, establishing the CAAPP in P.A. 92-24 and 93-32, respectively, effective July 1,
2001 and July 1, 2003.
Section 39.5 of the Act is much too lengthy to set out in detail here. Among the Section’s
purposes is establishment of procedures to authorize the Agency to issue CAAPP permits to
replace the State operating permits the Agency formerly issued under Section 39(a) of the Act.
Section 39.5(4)(g) provides:
The CAAPP permit shall upon becoming effective supersede the State operating
permit. 415 ILCS 5/39.5(4)(g) (2004).
The Section does not, by its terms, address the issue of a stay of a CAAPP permit during
the pendancy of any appeal of conditions. On this issue, in this proceeding, the Agency also
points only to Section 39.5(7)(i):
Each CAAPP permit issued under subsection 10 of this Section shall include a
severability clause to ensure the continued validity of the various permit
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requirements in the event of a challenge to any portions of the permit. 415 ILCS
5/39.5(7)(i) (2004).
The Board's specific procedural rules for CAAPP appeals were not adopted and effective
until March 18, 1994, in response to the Agency's Section 28.5 fast-track rule proposal.
Amendments to the Rule for Clean Air Act Permit Appeals and Hearings Pursuant to Specific
Rules, 35 Ill. Adm. Code Parts 105 and 106, R93-24 (Mar. 3, 1994). The R93-24 rules
themselves did not specifically address the issue of stays during the pendancy of CAAPP
appeals. The original Agency proposal contained a section specifically requiring an applicant to
specifically seek a stay of a CAAPP permit during the appeal. The Agency position that a
specific Board-entered stay was necessary in every case was vigorously contested by a number
of other participants, including the Illinois Environmental Regulatory Group (IERG) and the
American Automobile Manufacturer’s Association, citing Borg-Warner, 427 N.E.2d 415 and
Wells Manufacturing Co. v. IEPA, 195 Ill. App. 3d 593, 552 N.E.2d 1074 (1st Dist. 1990).
Association cites to Borg—Warner Corporation v.
While the provision was removed prior to adoption of the final rules, the Board’s final
opinion made it clear that the participants had not reached agreement on the issue. Rather, they
were suggesting, and the Board agreed, that the rulemaking was not the appropriate time of
forum for resolution of the issue. CAAPP Procedural Rules, R93-24, slip op. at 5 (Mar. 3, 1994).
The Board’s R93-24 CAAPP procedural rules were integrated into the existing set of
procedural rules, effective January 1, 2001, during the Board’s omnibus procedural rule clean-
up. Revision of the Board’s Procedural Rules: 35 Ill. Adm. Code 101-130, R00-20 (Dec. 21,
2000).
See
35 Ill. Adm. Code 105.Subpart C.
BOARD ANALYSIS
Stay Issue
The Agency does not dispute that air permitting constitutes “licensing activity” under the
Section 1-40 of the APA. The Agency also agrees that “the Borg-Warner decision may still
reflect good law and that it probably warrants, in the appropriate case, application of the doctrine
of
stare decisis
by Illinois courts.” Ag. Stay Mot. at 4. Nonetheless, the Agency contends that
the APA does not apply to CAAPP permits because:
1. In enacting the CAAPP severability clause in Section 39.5(7)(i) of the Act “the
General Assembly has effectively exempted [CAAPP permits] from” the APA so
Borg-Warner is not “a proper precedent.”
Id
. at 5; and
2. The CAAPP permit appeal process is subject to the “grandfathering clause” of the
APA because the Board had air permit appeals on the books before the July 1,
1977 applicability date of the APA.
Id
.
The Agency lastly agrees that the Board has discretionary authority to issue stays in
permit appeal actions, including those under CAAPP. The Agency notes that the Board has
issued stay orders staying either the contested conditions or the CAAPP permits in their entirety,
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depending upon the parties’ arguments. The Agency now argues that the Board should enter
discretionary stays only of contested permit conditions:
1. Because petitioners have failed to prove irreparable harm from compliance with
uncontested permit conditions carried over from previously-existing State
operating permits. Ag. Stay Mot. at 10.
2. To effect the legislative policies behind the CAAPP programs, noting that the
United States Environmental Protection Agency has questioned broad stays in
CAAPP permits, as attested to by affidavit.
Id.
at 16, 17-20.
First, the Board finds that Section 39.5 does not explicitly exempt CAAPP permits from
the APA. The legislature has demonstrated that it knows full well how to exempt particular
programs from APA requirements. As the Agency has pointed out, the legislature has done so
for the administrative citation program under Section 31.1 of the Act. 415 ILCS 5/31.1 (2004).
Section 31.1(e) specifically states in pertinent part that “Sections 10-25 through 10-60 of the
[APA] shall not apply.” 415 ILCS 5/31.1(e) (2004). The legislature does not do so in Section
39.5. Section 39.5 mentions the APA at various points, but only in the context of Agency
adoption of procedural rules under the APA to implement various subsections.
See, e.g
., 415
ILCS 5/39.5(4)(h) (2004). The Board is persuaded that Section 39.5(7)(i) refers only to the
validity of permit conditions, rather than to their effective date, as petitioner argues.
Next, the Board finds that the CAAPP program is not grandfathered out of the APA, and
that Borg-Warner is not distinguishable here. The Agency’s arguments in favor of distinguishing
or disregarding the Borg-Warner holding here simply are not persuasive. While the Board did
have general air operating permit appeal rules on the books in 1974, prior to the APA’s
applicability in 1977, these were the same general rules that the Borg-Warner court found did not
prevent application of the APA in regards to NPDES permits. The Clean Air Act Amendments
were not adopted by Congress until 1990, the General Assembly did not create the CAAPP
program until 1992, amending it in 1994, and the Board's specific procedural rules for CAAPP
appeals were not adopted and effective until March 18, 1994, in response to the Agency's Section
28.5 fast-track rule proposal in CAAPP Procedural Rules, R93-24.
In summary, as did the Borg-Warner court in the NPDES context, the Board finds that
the APA’s automatic stay provision applies to this CAAPP permit. Section 10-65(b) of the APA
in effect issues a stay by operation of law, so that it is unnecessary for the Board to reach the
issue of whether to exercise discretion to enter a stay in this particular case.
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5 ILCS 100/10-
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The Board notes that in one of the 21 CAAPP permits, the Board granted the stay of contested
permit conditions as requested by the petitioner and supported by the Agency. Soyland Power
Cooperative, Inc. v. IEPA, PCB 06-55 (Jan. 5, 2006). Today’s holding here is not inconsistent
with that action. As remarked by the Agency regarding stays in permit appeals, the Board has
tended to grant parties the relief they request. The Board believes that, in some cases, a permitee
may find it advantageous to operate under most of the terms of a renewed permit, rather than
under the terms of the old one. The Board finds nothing in the Act or APA that prevents a
permitee from electing
not
to avail itself of the APA stay. In such situations, the permitee then
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65(b) (2004). Petitioner must continue to operate by the terms and conditions of its prior State
operating permit during the pendancy of this appeal.
Finally, to the extent USEPA may have problems with applicability of the APA stay
provisions in CAAPP appeals, the Board cannot find that a tortured reading of both the Act and
the APA provides an acceptable solution. If necessary, the Agency may certainly choose to
bring legislative attention to the problem.
See
415 ILCS 5/39(c) where, in response to USEPA
problems with variances and permit appeals being granted by operation of law in various federal
programs, the Agency proposed and the legislature adopted the mandamus action as an
alternative approach to getting quicker resolution of such cases.
Administrative Record Filing
Section 105.302(f) of the Board’s procedural rules requires the Agency to file the entire
record of its decision within 30 days after being served with a petition for review, unless the
Board or hearing officer specifies another filing date. 35 Ill. Adm. Code 105.302(f). Under
Section 101.302(h)(2), the Agency is required to file a signed paper copy original and four
duplicate copies (five total) of the record. 35 Ill. Adm. Code 101.302(h)(2). Section 101.302(d),
however, provides:
Filing by electronic transmission or facsimile will only be allowed with the prior
approval of the Clerk of the Board or hearing officer assigned to the proceeding.
35 Ill. Adm. Code 101.302(d).
In its January 30, 2006 motion in this and the other 20 cases, the Agency observes that
motions for extension of time for the filing of the administrative record are pending, and that the
motions were filed due to the volume of material involved, the likelihood that not all cases would
actually go to hearing, and “due, in small part, to the review time required for the remaining
several hundred miscellaneous electronic mail messages of [Agency] personnel that had not yet
been reviewed.” Ag. Mot. to File at 4. The current motion addresses the logistics of preparing
and filing the voluminous administrative records. The Agency seeks leave to file a scanned
version of the administrative record on compact disk.
The Agency explains that, due to staff constraints, the Agency has explored the
possibility of hiring an outside contractor to perform required copying or scanning of hard
copies, and has in fact located a contractor who will scan the record onto a set of compact disks.
The Agency argues, however, that to produce a searchable version of the scanned compact disks
would be cost prohibitive to the State of Illinois:
Under the State contract, it costs the Illinois EPA a little over three cents a page to
have a document scanned by the contractor. To provide a searchable scanned
document via optical character recognition, it would cost the Illinois EPA
approximately a dollar a page for a typical written document. While the
would be operating under the terms of the most-recently issued permit, as to all but the
conditions explicitly stayed by Board order.
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contractor does not provide a guarantee on the accuracy of this function, it
typically operates with 70% degree of accuracy. If the Illinois EPA requested the
same search function on all handwritten documents in the Administrative Record
as well, it would cost approximately $1.65 per page. Counsel for the Illinois EPA
estimates that there are approximately 150,000 pages including countless
handwritten documents in the Administrative Record and the related records
pertaining to the twenty CAAPP permit appeals involving the other electrical
power generating facilities in the State. The cost differential between the varying
degrees of searchable records and a non-searchable record is anywhere from
$150,000 to $247,500 versus $5,000. Ag. Mot. to File at 6, n.1.
The Agency points out, however, that it “will be providing a type of search mechanism
through the bate stamping [sic] of the documents that will take place prior to shipment of the
documents to the scanning service.” Ag. Mot. to File at 6. The Agency accordingly seeks leave
to file its record by providing five sets of compact disks containing the record specific to any
particular case, and five sets of compact disks containing “the additional three trial boxes more
aptly characterized as general reference material and documents relevant to the decisions
underlying the issuance of all twenty-one CAAPP permits to the State’s electrical generating
facilities.”
Id.
In response to the Agency’s motion to file electronically, DMG noted the Board has not
yet ruled on the Agency’s motion for an extension of time. DMG does not oppose to the Agency
filling the administrative record on compact disks, so long as the documents are properly
scanned, able to be accessed, and legible. Accordingly, DMG states that its decision not to
oppose the motion rests on the condition that DMG would be able to “timely obtain hard copies
of those documents that Petitioner is unable to obtain in complete and legible form from the
compact discs.”
The Board has long been committed to streamlining its filing process, reducing the
number of paper copies filed, and accommodating electronic filing to the extent practicable given
its equipment and staffing constraints.
See, e.g
., Revision of the Board’s Procedural Rules: 35
Ill. Adm. Code 101-130, R00-20, slip op. at 5 (Dec. 21, 2000). The Board has successfully
completed a pilot electronic filing program, and has continued to gather experience and
information with an eye to codifying the electronic filing process. But, the Board has not as yet
developed procedural rules outlining all details and requirements for the electronic filing of
documents.
The filing of the 21 CAAPP permit appeals has both underscored the desirability of
electronic filing, and pointed out some of the practical problems inherent in transitioning from a
completely paper file maintenance process to a largely electronic file maintenance process. At
this juncture, the Board is not prepared to agree to the filing of this CAAPP record in non-
searchable electronic copy only. The Agency correctly notes that paper copy is not searchable in
the same way that electronic text is not. Paper copies, however, can be physically manipulated
to allow for side-by-side comparison of various pages. Hard copies, even photocopies of original
documents, generally provide fewer legibility challenges than do documents that have been
scanned from hard copy into electronic text, and then printed from electronic text to hard copy.
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The Board grants the Agency’s motion for an extension of time to file the record and
grants the Agency’s motion to file the record by compact disks. The Board finds, however, that
it is essential for the Agency to file at least one original hard, paper copy of the record. The
Agency may file the additional required four copies of the record on compact disk; these need
not be in a searchable format. The hearing officer is directed to set the time for filing of the
administrative record after consulting the parties.
SUMMARY OF FINDINGS
1. The Board finds that the APA’s automatic stay provision applies to this case,
consistent with long-standing case law under the Act: Borg-Warner Corp. v.
Mauzy, 100 Ill. App. 3d 862, 427 N.E.2d 415 (3rd Dist. 1981). Section 10-65(b)
of the APA in effect issues a stay by operation of law, so that it is unnecessary for
the Board to reach the issue of whether to exercise discretion to enter a stay in a
particular case.
2. The Board grants the Agency’s motion for an extension of time to file the
administrative record.
3. The Agency’s motion for leave to file the administrative record on compact disks
is granted in part. The Agency must file at least one original hard, paper copy of
the record. The Agency may file the additional required four copies of the record
on compact disk; these need not be in a searchable format. The Board directs the
hearing officer to set the time for the filing of the record in consultation with the
parties.
IT IS SO ORDERED.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above order on February 16, 2006, by a vote of 4-0.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
